12 may 2010

Mortgage Market

•    9.3 million of Canadian homeowners
•    5.55 million of mortgage holders
•    4 million renters
•    Total value of Canadian mortgages: $1.04 trillion
•    Total value of owner-occupied mortgages: $770 billion
•    Total value of this year mortgages, including purchases, renewals, refinances etc.: $228 billion

Mortgage Activity

•    Homeowners with this year new mortgages: 24%
•    New mortgages for purchases: 7%
•    New mortgages for renewals, refinances, or transfers: 17%
•    Mortgagors who took out equity from their homes in the past year: 11%

Rate Type

Mortgagors chose the following types:

•    Fixed rates: 65%  
•    Variable rates: 29%
•    Hybrid mortgages (part fixed/part variable): 6%

Equity

•    Average home equity for mortgage holders: $159,000
•    Average Canadian mortgage: $138,000
•    Average loan-to-value: 46%
•    Mortgagors with less than 5% equity: 2%
•    Just 1% owe more than their home is worth

Market Share

•    New mortgages arranged by brokers: 30%
•    New mortgages arranged by banks: 50%
•    New mortgages arranged elsewhere (credit unions, insurance companies): 20%

Term

•    1-year: 6%
•    2-year: 7%
•    3-year: 12%
•    4-year: 9%
•    5-year: 44%
•    Over 10 years: 22%

Payment Arrears

•    Mortgagors without overdue payment: 93%
•    Mortgagors missing their payments in the last year: 4%
•    Mortgagors indicating they have difficulties making payments: 6.8%
•    Mortgagors expecting that future potential rate increases may “exceed their possibilities”: 8.6%
•    Mortgage holders with 90+ days overdue: 0.45%

Amortizations

•    Mortgagors with amortizations over the standard 25 years: 17%
•    Last year mortgagors with amortizations over 25 years: 36% (it was 46% a year ago).

Rates

•    Last year average discount for posted 5-year fixed rates:1.46%
•    The average Canadian mortgage rate:4.09% (it was 4.83% a year ago)
•    The rate on mortgages originated in the past six months: 3.63%
•    Mortgagors with 8% or more rates: 1.3%

Future Rate Expectations

•    70% of Canadians expect mortgage rates to rise
•    0% expect rates to fall

Pre-payments

•    Mortgagors who have increased their regular payments in the previous year: 16%
•    Mortgagors who have made lump-sum pre-payments: 13%
•    Mortgagors who have made both forms of pre-payment: 5%
•    Total lump-sum prepayments averaged about 1% of the typical borrower’s mortgage

Other interesting facts

•    325,000 mortgagors have rental units in their primary residence generating rent
•    12% of borrowers switched into a fixed rate from a variable rate

The Survey

CAAMP is the national organization that represents Canada’s mortgage industry. This survey was conducted on its behalf by Maritz during April 2010 (the author is Will Dunning – Chief Economist for CAAMP and founder of Will Dunning Inc.) The information used in this report was taken from various sources, including an online survey of 1,800 mortgage homeowners.

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